Sandes and Sandes
[2012] FMCAfam 692
•13 July 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SANDES & SANDES | [2012] FMCAfam 692 |
| FAMILY LAW – Property – consideration of notional add backs. |
| Family Law Act 1975, ss.75, 79 Evidence Act (1995), s.128 |
| Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355 AJO v GRO (2005) 33 Fam LR 134 at p144, (2005) FLC 93-218 DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816 Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Kowaliw (1981) FLC 91-092; (1981) 7 Fam LR N13 AB v GB (No2) (2005) 34 Fam LR 82 |
| Applicant: | MS SANDES |
| Respondent: | MR SANDES |
| File Number: | BRC 3684 of 2011 |
| Judgment of: | Lapthorn FM |
| Hearing dates: | 12 & 13 April 2012 |
| Date of Last Submission: | 13 April 2012 |
| Delivered at: | Brisbane |
| Delivered on: | 13 July 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hackett |
| Solicitors for the Applicant: | Evans & Company Family Lawyers |
| Counsel for the Respondent: | Mr McGregor |
| Solicitors for the Respondent: | Jones McCarthy Lawyers |
ORDERS
That within 7 days the parties do all acts and things as are necessary to distribute the proceeds of sale of the properties at Property H and Property E in the State of Queensland currently standing in the trust account of Evans and Company Family Lawyers as follows:
(a)$321,320 to the wife; and
(b)$101,267 to the husband; and
(c)Any accretion in value to be divided 63.5% to the wife and 36.5% to the husband.
That within 7 days the parties do all acts and things as are necessary to cause the property situate at Property M in the State of Queensland to be marketed for sale.
That upon the sale of the property the proceeds of sale shall be applied in the following priority:
(a)To pay out the mortgage encumbering the property;
(b)To pay any rates or local government charges owed;
(c)To pay the real estate agent the agreed commission or agreed sale costs;
(d)To pay the conveyancing solicitor any agreed costs or outlays;
(e)As to the balance:
(i)63.5% to the wife; and
(ii)36.5% to the husband.
That within 7 days the parties do all acts and things as are necessary to cause the property situate at Property J in the State of Queensland to be marketed for sale.
That upon the sale of the property the proceeds of sale shall be applied in the following priority:
(a)To pay out the mortgages encumbering the property;
(b)To pay any rates or local government charges owed;
(c)To pay the real estate agent the agreed commission or agreed sale costs;
(d)To pay the conveyancing solicitor any agreed costs or outlays;
(e)As to the balance:
(i)63.5% to the wife; and
(ii)36.5% to the husband.
That within 7 days the parties appoint an independent solicitor to conduct the conveyance on the sale of both properties and if there is no agreement as to the solicitor then the parties are to do all acts and things as are necessary to request the President of the Queensland Law Society Inc to appoint a solicitor.
That otherwise than is provided for in these orders the wife retain free from any and all claims by the husband:
(a)The motor vehicle in her possession;
(b)Household contents and personal items in her possession;
(c)Her superannuation;
(d)Her bank deposits.
That otherwise than is provided for in these orders the husband retain free from any and all claims by the wife:
(a)Any motor vehicle in his possession;
(b)Household contents and personal items in his possession;
(c)His superannuation;
(d)His bank deposits.
In the event that either party refuses or neglects to execute a deed and/or instrument in compliance with the prior paragraphs hereof, the Registrar is hereby appointed pursuant to s.106A Family Law Act 1975 to execute all deeds and/or instruments and also such acts and things to give validity to operation to the deeds and/or instruments contemplated in these orders.
IT IS NOTED that publication of this judgment under the pseudonym Sandes & Sandes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 3684 of 2011
| MS SANDES |
Applicant
And
| MR SANDES |
Respondent
REASONS FOR JUDGMENT
Applications
The parties who had a 25 year relationship have been unable to reach agreement to finalise their property settlement. I am asked to determine an appropriate property adjustment under the Family Law Act 1975.
The wife filed her Initiating Application on 5 May 2011 wherein she sought orders that would provide in effect a 65% distribution of the nett pool of assets and liabilities in her favour.
The husband’s Response was filed on 22 July 2011. In that document he sought a 52%/48% adjustment in the wife’s favour however at the hearing his counsel submitted a just and equitable outcome would be a 55%/45% adjustment in the wife’s favour.
At the hearing the parties not only remained in dispute as to what would be a just and equitable distribution they could not agree as to the extent of the pool of assets and liabilities. They disagreed as to whether a loss and associated expenses in relation to a property purchased in the husband’s name after separation should be added back into the pool of assets and liabilities and how certain potential tax liabilities should be accommodated.
Evidence
The wife relied upon her Initiating Application filed 5 May 2011; her affidavit filed 12 March 2012 and her financial statement also filed 12 March 2012.
The husband relied upon his Response filed 22 July 2011; his affidavit filed 9 March 2012 and his financial statement also filed 9 March 2012.
A number of documents were tendered into evidence.[1]
[1] W1 – Property E – Add back calculation worksheet, W2 – Flagged documents produced under subpoena by ANZ Bank, W3 - Flagged documents produced under subpoena by [A] Capital Solutions, W4 - Flagged documents produced under subpoena by Bendigo & Adelaide Bank, W5 – Summary of explanation of withdrawals by the wife, W6 – Correspondence dated 12/9/11 between Evans & Company and Jones McCarthy Lawyers, W7 – Bundle of emails and correspondence from 10/11/11 to 20/12/11, W8 - Flagged documents produced under subpoena by Queensland [omitted] Services Authority, W9 – Husband’s 2011 diary, W10 – Husband’s tax return for year ending 30/6/11, W11 – Letter dated 9/9/11 from ANZ Mortgage Group to the husband, W12 ANZ Bank statement for [N] Pty Ltd for period 30/9/10 – 29/10/12, H1 – Summary of Partnership, Trust, Combined Incomes from 2004 to 2011 as asserted by the husband, H2 – Two letters from Chiverall & Bulley dated 27/3/12 and 1/4/12, H3 – Australian Taxation Office integrated tax statements for the husband, C1 – List of Assets and Liabilities.
Both parties were cross-examined. I have had regard to their evidence,[2] including the tendered documents. Regrettably I have found that each party was at times less than entirely truthful in their account of events.
[2] Subject to agreed and determined objections to their affidavit evidence
Throughout these reasons I will refer to a number of facts. Any such reference should be regarded as a finding of fact unless a contrary intention is clear from the context.
The parties married in October 1993 but had been living together since 1985. Although the wife gave evidence in her affidavit that they separated in September 2010 in cross-examination she said they had in fact agreed to separate in July 2010 but did not physically separate until September. The husband was not challenged on the date of separation. I am satisfied their relationship was in difficulty by July 2010 and the parties had been discussing their future but they separated on a final basis in September 2010. A divorce order came into effect in December 2011. The wife commenced a new relationship with Mr G in October 2010 and moved in with him after the sale of the former matrimonial home in October 2011. The husband has not re-partnered but is currently seeing another person.
[X] who is 15 years of age, is the only child of the relationship. Her mother has been her primary carer all of her life and since separation she has lived with her mother. There is no intention by either party to alter this arrangement. She has spent some holiday time with her father and communicated with him regularly but has not had regular and consistent overnight time with him since separation. The husband is hopeful of this changing now that his is living in a unit close to her school. By the date of the hearing she had spent about three or four overnights there with him but a regular pattern of spending time had not yet developed.
[X] attends a private school in Brisbane. Since separation the husband has met her school fees by drawing down from capital. He has not paid child support and has provided only minimal financial support for the child’s [omitted] and other extra-curricular activities. These have been met largely by the wife.
Both parties are 45 years of age and are in good health.
The husband lives in a rented unit at [suburb omitted]. He is a self-employed [occupation omitted].
The wife is employed as a part time [omitted] earning approximately $670 gross per week. She lives with her new partner in his home at [omitted]. She has provided Mr G with $12,950 to assist in the construction of additions to the home to provide appropriate accommodation for [X]. Although her affidavit evidence was that she met her own expenses her oral evidence, which I accept, was that she gives Mr G all of her nett income which comes to $600 per week and he picks up any shortfall.
The parties were very young when they commenced their relationship and did not have any significant assets. By the time they married the husband was a qualified [omitted] and the wife worked in [omitted]. She continued in that role until their child was born. After [X]’s birth the mother took on the role of primary carer for the child and homemaker. She also provided administrative support to the husband’s [omitted] business. During their relationship the husband conducted his [omitted] business through a partnership with the wife known as “[Mr & Ms Sandes] Partnership” and a company known as [N] Pty Ltd. Both these entities have now been wound up. The [omitted] business involved both [omitted]. The husband has also project managed [omitted] work.
After the business was wound up the husband continued doing [omitted] work but said his income is greatly reduced. It was put to him in cross-examination that he has in the past and will in the future have the capacity to earn around $300,000 a year which he denied. When cross-examined about what information he provided the Queensland [omitted] Services Authority in the past he conceded that he had indicated his turnover would not exceed $300,000. He said he had just ticked the minimum on the form. When shown the form it was put to him that the $300,000 was not the minimum which he accepted. It was then put to him that he could have chosen a lower turnover to which he again conceded. He appeared however to be confused when giving that evidence. He disagreed with the proposition that he was making his evidence up. A careful look at relevant forms[3] show that his initial evidence was correct as the lower turnover option was only available to [occupation omitted].
[3] Exhibit W8
When the parties separated they held interests in four pieces of real estate:
a)The former matrimonial home at Property H (“former matrimonial home”);
b)A spec home under construction at Property M (“Property M property”);
c)A spec home under construction at Property P (“Property P property”); and
d)A commercial property at Property J (“Property J property”).
The Property P property was sold in January 2011 with the proceeds of sale, amounting to $414,868, being deposited into a Line of Credit secured by the former matrimonial home. $100,000 was later drawn down and provided to the wife and $150,000 to the husband. A tax liability of the husband in the sum of $55,068 was also paid out of these proceeds. The wife also had a tax liability but that was not paid. It remains outstanding and the parties agree it currently stands at $58,934. The former matrimonial home sold in October 2011. The nett sale proceeds of $228,377 were placed into the trust account of the wife’s solicitors pending the outcome of these proceedings.
Whilst both parties agree that at around the time of separation they had discussions as to how they should settle their property adjustment they gave differing accounts of the agreement reached and unilateral changes to what they understood to be their agreement.
Just after the parties separated the husband organised to purchase a unit at [E]. The circumstances surrounding this purchase remained significantly in dispute between the parties.
The unit was purchased in the husband’s sole name with settlement taking place on 23 September 2010. The purchase price was $650,000. The wife gave evidence that she was unaware of the purchase until 15 February 2011 when she obtained through her solicitor a property search. The husband refuted this assertion. He said that the parties had reached an agreement prior to separation that he would purchase a new property while they still had borrowing capacity. The wife denied this agreement. Her evidence was that they had agreed for her to move into an apartment and for the husband to remain in the former matrimonial home but that the husband had subsequently changed his mind. The husband had initially moved into his parent’s home at separation.
It was put to the wife by counsel for the husband that her evidence in regard to a lack of knowledge of the purchase of the Property E property was not correct in that she had signed documents enabling the husband to borrow funds so that he could make the purchase. The wife had given evidence in her affidavit of signing a document from the ANZ Bank but that she did not see a bank manager or discuss the purpose of the loan with any person. She said in her affidavit:
I simply signed what I was asked to sign by [Mr Sandes]
In her oral evidence she alleged she was under duress when doing so. There was no mention of duress in her affidavit. Her evidence was that she did not like borrowing money but would sign documents when asked. The husband confirmed in cross-examination that that was her belief and practice. It was never put to him that he had done anything to give rise to the wife being under duress when signing this document or indeed any other document. Although she maintained that she had been under duress “my whole life” she gave no evidence of any behaviour on the part of the husband or anyone else that would lead me to accept she was under duress at the time of signing the ANZ document or other documents during her relationship. In paragraph 88 of her affidavit she gave evidence that she would not have co-operated with the husband when he asked for $200,000 to be made available to him if she had known the purpose was to fund an apartment. Given her confidence in saying she would not have co-operated I do not accept her assertions that she was likely to be under duress from the husband and would sign documents because she had no choice.
The wife maintained that the first she knew of further borrowings from ANZ Bank was when she was asked by the husband to sign a document in September 2010. She said she was only given one page to sign and she was not aware that he intended to use the funds to finance the purchase of the Property E property. Exhibit W2 shows that on 9 August 2010 the wife co-signed with the husband an application to borrow funds. The purpose of the borrowings was not disclosed in that document. I do not accept her evidence that it was not until September that she became aware of the further borrowings. Although in cross-examination she said she signed a document on 14 September it is clear she also signed an ANZ Bank document on 9 September which was a statement of financial position. That same day the husband received a letter from the bank offering the finance.
On 13 September the husband signed the mortgage contract with the ANZ Bank. The wife signed it the following day. She said she was only provided with the last page of the document and did not read it. The husband said that he left the whole document with the wife overnight for her to sign. In cross-examination the wife initially appeared to be equivocal as to whether the husband was present when she singed the document but later said that he was there. I preferred the husband’s evidence and find that he left the whole document with the wife overnight for her to sign.
It was put to the husband that he had deliberately avoided informing the wife about the purchase of the apartment. He denied this. His evidence was that he and the wife had inspected the development some years before but that she took no part in this particular purchase. His evidence was that as a result of the agreement to which I have already referred the wife was aware he intended to purchase another property.
At the husband’s request the wife had withdrawn a total of $200,000 from term deposits in her name and provided the funds to the husband. The first withdrawal was for $50,000 on 25 August and the remainder was withdrawn on 21 September. These funds were utilised to fund the purchase of the Property E property. The wife denied any knowledge of the use of the funds towards the purchase. She maintained she was told they were to reduce debt.
The husband also asserted that after separation he borrowed $120,000 from family and friends.
Three days after the settlement of the Property E property the parties applied for a short term loan from [A] Capital for $150,000. There was no mention of the Property E property, the mortgage attributable to it or the loan to family and friends in the application. The husband rejected the assertion put to him by counsel for the wife that the reason there was no mention of the Property E property was that the loan application was a joint one and he did not want the wife to become aware of the purchase.
The wife said she was coerced into signing the application for this loan. Her signature was witnessed by a solicitor who according to the wife saw that she was upset and said to her:
“you don’t have to do this, you don’t have to do this”
Notwithstanding this advice the wife signed the application. The solicitor was not called to give evidence.
The wife was also contacted by telephone on 1 October 2010 by an employee of [A] Capital who confirmed with her that she was aware of the terms and conditions of the loan, that she was happy for settlement to proceed and was not under any duress when singing the application. I am satisfied the wife was not under any duress when signing the application and had an opportunity to raise with the solicitor or the employee of [A] Capital any concerns she may have had with the application.
Although the husband asserted in his affidavit the purpose of this loan was to repay family and friends and to stabilise the financial position of the parties, in cross-examination he conceded he told the financial institution that the purpose was to acquire [omitted] and transport equipment along with tools and to update technology equipment. He said the loan organisers told him to include that in the application. The funds were deposited into the business account of [N] on 1 October and were largely dispersed by 27 October. Only $25,000 appeared to have been used to repay friends from whom the husband said he had borrowed. The other withdrawals appear to be business related expenses. The husband’s evidence in this regard was avoidant and I was left with the impression he was not entirely truthful not only in what he told the financial institution but the Court. During the hearing I issued a certificate under s.128 of the Evidence Act 1995 in relation to evidence the husband gave following on from questions in cross-examination relating to him inflating the costs in a [omitted] contract for his sister. Overall I formed the view the husband was inclined to provide false and/or inaccurate figures in loan applications to benefit him and others.
The loan with [A] Capital was repaid on 26 October. The parties had secured a long term loan from [omitted] Trustees in the sum of $208,000 to do so. The wife also signed documents in relation to this loan. There was no mention of the Property E property and its liability on the application and the husband again denied the reason for that was to avoid alerting the wife to the purchase.
When I consider all of the evidence in relation to the borrowings by the parties and the husband’s purchase of the Property E property I am satisfied that the wife was never under duress in signing any of the documents and her statements to that effect were an attempt by her to ‘gild the lily’. I accept the evidence of both the husband and the wife that she had a reluctance to borrow funds but would normally sign documents provided to her by the husband throughout their relationship. I was not persuaded however that she would do so without knowledge of the reason for the need to sign the documents.
In her affidavit she gave evidence that she played a hands on role in the business by doing bookwork, running errands, paying bills and accounts, banking and keeping records. She would maintain record keeping and complete the business activity statements for lodgement although near the end of the relationship the accountant would complete the business activity statements from her record keeping and reports. She also gave evidence of maintaining records for each job in separate folders which comprised the contracts and records of payment of any invoices as well as payments from clients. Notwithstanding this evidence she appeared to play down her understanding of the financial affairs of the business in cross-examination. Whilst I have no difficulty in accepting she did not really understand the difference between a discretionary trust and the company entity by which the partnership traded, with her significant involvement in the book keeping and other business activities I am unable to accept she simply signed documents without looking at them or at the very least obtaining an appreciation of their nature. This is particularly so when she was involved in three significant loan applications between August and October 2010 and had withdrawn $200,000 in two transactions between 25 August and 21 September.
Whilst I accept the husband had made dishonest representations to both [A] Capital and [omitted] Trustees I am not persuaded in doing so he was also deliberately keeping the wife from the knowledge of the purchase of the Property E property. I accept his evidence that when the parties were discussing their property adjustment prior to him moving out of the former matrimonial home he told the wife of his intention to purchase another property. In that regard I preferred his evidence over that of the wife. Although it was urged upon me to accept the wife’s evidence in light of the letter she instructed her solicitors to write on 15 February 2011 on balance I have concluded the wife did have knowledge of the husband’s purchase and assisted him to do so by signing the initial loan application with the ANZ Bank and by withdrawing the large sums of money from the term deposits.
The law
In determining property proceedings the court is required to conduct a four staged process. The first task is to identify the assets, liabilities and financial resources of the parties at the time of the hearing. In doing so the court may adopt a single or two pools approach in relation to assets and superannuation. The court then considers the contributions made by the parties, at the commencement, during and after the relationship, before looking at their future needs. Finally the court needs to be satisfied that the orders are just and equitable.[4]
[4]Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355, S79 Family Law Act
The property of the parties
Apart from the value that should be ascribed to a GST liability from the partnership the parties reached agreement as to the values that should be attributed to their assets and liabilities. They remained in dispute however as to whether the loss on Property E should be added back into the pool.
It is open to a court, in appropriate circumstances to exercise its discretion and notionally add back into a pool of assets for distribution funds that no longer exist. The adoption of that course will depend on the facts of each case. The Full Court of the Family Court in AJO v GRO[5] summarised the three categories of such cases:
a)Where the parties have expended money on legal fees[6];
b)Where there has been a premature distribution of matrimonial assets[7]; and
c)Where a party has by a course of conduct reduced the value of an asset or where the party has acted recklessly, negligently or wantonly with the matrimonial assets effectively reducing their value.[8]
[5] (2005) 33 Fam LR 134 at p144, (2005) FLC 93-218 at p79,617
[6] DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816
[7] Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569
[8] Kowaliw (1981) FLC 91-092; (1981) 7 Fam LR N13
In this case the parties have agreed that the prepaid legal costs of each party be added back and also the monies advanced by the wife to Mr G for alterations to his home. The wife however asserted that the husband had engaged in a premature distribution of matrimonial assets by acquiring the Property E property without her knowledge or consent. I have already rejected her evidence as to her knowledge and found she assisted him to do so by withdrawing the funds from the term deposits and by signing the loan application forms
The wife argued in the alternative that if the court was to find the husband was acting upon the agreement asserted by him he was still doing so on a unilateral basis given the wife took no part in the selection of the Property E property and the level of borrowings. She argued that the parties’ property pool would have stood at least $178,000 higher on her case. Economic loss may be treated as a premature distribution of the asset pool and added back as an asset of the party who has had the benefit of the funds as an alternative to being considered under s.75(2)(o) as the later approach may lead to an unjust result if the s.75(2) findings are applied to a depleted asset pool.[9] There is however no evidence to warrant a finding that the husband had acted recklessly at the time of purchasing the property. The parties have throughout their relationship bought investment properties. There are always risks associated in doing so.
[9] AB v GB (No2) (2005) 34 Fam LR 82
Whilst I accept the wife did not choose the Property E property or directly take part in the purchase she was involved in the withdrawing of the large sums of money and all three loan applications. Even if I accepted she did not read the documents, which I do not, the wife would have been negligent or at the very least reckless in not doing so and I would exercise my discretion and decline to add back the loss and associated expenses. I would have come to a different conclusion if I had have been persuaded she was acting under duress however.
Although I accept the wife is disappointed in the loss made on the Property E property and the increase in borrowings that arose from its purchase I am not persuaded to exercise my discretion and add the item to the pool of assets
When the remaining two properties are sold the parties will incur both capital gains tax and goods and services tax liabilities. The parties’ accountant has estimated that each party would be liable for approximately $13,900.[10] This figure is dependent on a number of factors such as the final sale prices, the marginal tax bracket applicable to the parties and any offset for the capital loss on the Property E sale. That offset would only be available to the husband given that property was purchased in his own name. His capital loss was calculated at $96,700.
[10] Exhibit H2
Counsel for the husband was critical of the wife for wanting to take advantage of the capital loss associated with the Property E property for the purposes of calculating the tax liability in light of her request for the loss to be added back into the pool. Whilst I understand his point I accept the submissions made on the wife’s behalf that the husband alone will obtain a benefit from being able to utilise the loss to offset the capital gain on the other properties. For that reason I propose to adopt the value urged upon me by the wife.
In this case given the parties were together from when they were teenagers I consider it appropriate to adopt a single pool approach in relation to their superannuation which is modest and not too dissimilar in quantum. Although I will list the superannuation separately in the table below I do not intend to consider it in relation to contributions and adjustment differently than from the pool of assets. I find from the evidence that the assets and liabilities of the parties are as follows:
Assets and Liabilities
| Assets | Ownership | Value |
| Proceeds of Sale of Property H | Joint | $ 228,377 |
| Proceeds of Property E | Joint | $ 194,210 |
| Property M | Joint | $ 475,000 |
| Property J | Joint | $ 325,000 |
| Wife’s car | Wife | $ 59,500 |
| Husband’s car | Husband | $ 8,000 |
| Household contents | Wife | $ 7,120 |
| Household contents | Husband | $ 7,197 |
| Cash at Bank | Wife | $ 24,000 |
| Cash at Bank | Husband | $ 25,147 |
| Subtotal | $1,353,551 | |
| Addbacks | ||
| Wife’s prepaid legal costs | Wife | $ 22,806 |
| Husband’s prepaid legal costs | Husband | $ 50,602 |
| Wife’s advance to Mr G | Wife | $ 12,950 |
| Subtotal | $ 86,358 | |
| Superannuation | ||
| [B] Capital | Husband | $ 40,584 |
| [B] Capital | Wife | $ 30,142 |
| Subtotal | $ 70,726 | |
| Total of Assets, Addbacks and Superannuation | $1,510,635 | |
| Liabilities | ||
| Mortgage on Property M | Joint | ($ 293,030) |
| Mortgage on Property J | Joint | ($ 219,828) |
| Income Tax liability | Wife | ($ 58,934) |
| GST liability [Mr & Ms Sandes] Partnership | Wife | ($ 13,900) |
| Subtotal | ($ 585,692) | |
| Nett Assets | $ 924,943 |
Contributions
I now turn to the second step in the exercise namely an assessment of the parties’ contributions.
Each party came into the relationship without any significant assets or liabilities. There is no dispute that during the relationship their contributions were equal given the husband by his conduct of the [omitted] business brought in the income and the wife fulfilled the role of homemaker and parent after their child was born. Although the husband gave evidence of receiving $30,000 in gifts from his parents and grandmother throughout the relationship given the length of the relationship I do not intend to make any adjustment for them.
The husband argued that after separation there has not been any significant change to warrant an adjustment in either party’s favour however the wife sought a modest adjustment to her. She argued that after separation the husband’s income as decreased and he has used capital to meet expenses such as school fees. She has borne a greater burden financially in caring for the child as the husband has not spent much time with the child nor has he paid child support. I propose to consider the issue of child support when I consider the s.75(2) factors however I am persuaded the wife has made a greater contribution to the child’s care both financially and by way of parenting since separation.
The wife has returned to the work force and although she had the benefit of living in the former matrimonial home for about a year after separation she moved in with her current partner when it was sold.
Weighing up the various contributions of the parties I accept the wife’s argument and find that the contributions should be assessed at 51% to the wife and 49% to the husband.
Section 75(2) factors
Having determined the contribution elements the court is required to have regard to the provisions of s.75(2) in so far as they are relevant.
I am satisfied that both parties are of a similar age and both in good health.
They are each able to be gainfully employed. It was submitted on behalf of the wife that the husband has the greater earning capacity. The wife was out of the paid workforce from just before the child’s birth until separation. She is currently earning around $30,000 a year in an [omitted] role, the hours of which enable her to be available to care for their child.
It was asserted on her behalf that the husband had an income 10 times greater than hers and that there should be an adjustment in her favour to take account of that disparity. The husband denied he had an income of $300,000 a year. In his financial statement he estimated an income of $1,026 per week which equates to $53,000 a year. This income included rental income from the investment properties yet to be sold. His tax return for the 2011 financial year showed a taxable income of $15,299. Counsel for the wife argued that the husband asserted he was earning $15,000 a year but that was not his evidence. Counsel was also incorrect when he submitted that the husband has consistently told the Queensland [omitted] Services Authority ([Q]) that his turnover is about $300,000, even after separation. The husband has consistently selected the lowest turnover rate available to him as a [occupation omitted] when advising the [Q]. Whilst a quick glance at the forms tendered in exhibit W8 might suggest otherwise a careful reading of them shows the husband’s initial evidence to which I have already referred was correct. He indicated that his turnover would not exceed $300,000. This has always been the case.
Counsel for the husband tendered a summary of partnership, trust and combined incomes for the financial years 2004 to 2011.[11] The income in the most successful year, 2009, was $258,615. A loss of $38,815 was achieved in 2007. In 2010 the combined income was $108,254. The summary shows that the financial income for the business would differ from year to year. I accept however the submissions made by counsel for the wife that the capital gain on spec homes must also be taken into consideration. This would also differ from year to year.
[11] Exhibit H1
The husband was cross-examined as to his current work activities and in particular as to working in partnership with another [occupation omitted]. There is insufficient evidence for me to make any finding that the husband has entered into a partnership with another [occupation omitted]. I am however satisfied that the husband has been able to obtain regular work since the winding up of the previous business. Although the husband conceded he wrote in the back of his diary that he expected to earn $500,000 in 2012 there is no evidence of him being able to achieve that goal.
When I take into account the wife was out of the paid workforce for many years and is currently working in an [omitted] job earning around $30,000 a year and caring for [X] along with the husband having acquired the skills as a [omitted] and his ability to continue to find work on a regular basis I am satisfied there is a disparity of income between the parties. Whilst there will be some years when the husband will not earn as much as he will in other years I am satisfied that he would be able to consistently earn more than the wife and in some years considerably so. Whilst I am not persuaded the differential will be consistently tenfold an adjustment is warranted in the wife’s favour to take into account the differential.
The wife has re-partnered. Mr G did not give evidence. The evidence initially given by the wife as to the financial circumstances of her co-habitation with Mr G was not extensive. However after cross-examination it became clear the wife enjoys the benefit of living with Mr G in a de facto relationship but although they commenced their relationship in September 2010 they did not commence living together until October 2011. The relationship is therefore still in its early stages. The wife provides Mr G with virtually all of her pay which after tax is around $600 a week to cover expenses for her and [X]. Any shortfall is met by Mr G. The wife has provided some money towards erecting additions to the property to more appropriately accommodate [X]. I accept the wife’s submissions that no adjustment to either party is warranted by the financial circumstances of her co-habitation with
Mr G.The husband has not been making regular child support payments and although he has paid the private school fees this has been done by drawing down from capital. Given the parties have been separated for nearly two years and the husband is yet to make any child support payments I have no confidence he will start making any financial contributions to the wife for their daughter’s care in the near future. An adjustment in the wife’s favour is accordingly warranted.
Although the husband is hopeful of spending more time with his daughter in the future I am satisfied the wife will be the one primarily responsible for the child’s care.
When I take into account the disparity of income; the wife will have the primary care of the child until she is 18; and the husband’s failure to make sufficient contribution to the child’s financial support I am satisfied an adjustment is warranted in the wife’s favour. I would assess that adjustment at 12.5%.
Section 79(2) – just and equitable
The fourth stage of the process is to step back and assess whether in all of the circumstances it is just and equitable to make the orders to be proposed.
I have assessed the contributions at 51% to the wife and 49% to the husband and found there should be a 12.5% adjustment to the wife for future needs. This would mean a distribution of 63.5% to the wife and 36.5% to the husband. In ascribing those percentages to the nett property pool of $924,943 the wife would receive a nett distribution of $587,339 and the husband $337,604. If each party was to retain their car, household contents, superannuation, cash at bank and the added back pre-paid legal fees and the wife was to retain the added back advance to Mr G and the two tax liabilities, cash adjustments could be made out of the proceeds of sale of the properties that have been sold and the future proceeds of sale when the two remaining properties are sold. Such an adjustment would look like this:
The wife to retain:
| Car | $ 59,500 |
| Household Contents | $ 7,120 |
| Cash at Bank | $ 24,000 |
| [B] Capital Superannuation | $ 30,142 |
| Add back pre-paid legal fees | $ 22,806 |
| Add back advance to Mr G | $ 12,950 |
| Sub-total | $156,518 |
| Income Tax Liability | ($58,934) |
| Estimated Capital Gain and GST liability | ($13,900) |
| Sub-Total | ($72,834) |
| Sub-Total | $ 83,684 |
| Total Cash adjustment | $503,655 |
| Total | $587,339 |
The husband would retain:
| Car | $ 8,000 |
| Household Contents | $ 7,197 |
| Cash at Bank | $ 25,147 |
| [B] Capital Superannuation | $ 40,584 |
| Add back pre-paid legal fees | $ 50,602 |
| Sub-Total | $131,530 |
| Total Cash adjustment | $206,074 |
| Total | $337,604 |
To achieve the cash adjustments referred to in the tables above it will be necessary to divide the proceeds of sale that are currently held in trust and the future proceeds of sale. Because the actual future proceeds of sale are unknown there would be a risk of an injustice if I was to apportion the current available cash in a manner that would not provide a current 63.5/36.5 division. This would then enable the proceeds of sale of the two remaining properties to be divided in the same proportions when the sales settle. Therefore I propose to order that out of the proceeds of sale of the former matrimonial home and Property E the wife is to receive $321,320 and the husband receive $101,267. When the other properties sell the nett proceeds are to be adjusted 63.5% to the wife and 36.5% to the husband.
When I consider all of the above I am satisfied that such a distribution would be just and equitable in the circumstances. Accordingly I will make the orders set out in the beginning of this judgment.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Lapthorn FM
Date: 13 July 2012
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